Wheaton downgrades production guidance

By Nathan Richardson / August 12, 2022 / www.mining-journal.com / Article Link

"While not without its challenges, our diverse portfolio once again delivered strong operating cash flow and an attractive dividend yield, highlighting the resiliency of the streaming model to the inflation pressures currently being felt across the global economy," Wheaton's president and CEO Randy Smallwood said.

The company's adjusted net earnings for the three-month period fell 7% year on year to US$149.29, while on a per share basis the dropped to $0.331.

BMO Capital Markets analyst Jackie Przybylowski said the EPS was above the consensus estimates of around $0.30-$0.32, while falling below BMO's $0.42.

"Our $0.42 estimate was high - we had also assumed that gold production would have been higher in Q2 and through 2022 to bring production volumes to Wheaton's previously disclosed guidance range," Przybylowski said.

Wheaton's gold equivalent ounces production in Q2 was 162,569oz, which is down 15% year on year.

"The lower-than-expected Q2 production volume is consistent with the reduced 2022 full-year guidance and both are below our previous expectation," she said.

Wheaton has dropped its total GEO production guidance for 2022 to 640,000-680,000 from the original range of 700,000-760,000.

The five-year average annual forecast has been lowered from 850,000 GEOs to 820,000. And the 10-year annual average has been downgraded from 910,000 to 870,000 GEOs.

"Given the proposed termination of the Keno Hill PMPA, lower production from Stillwater due to severe weather and flooding in the state of Montana in June as well as lower than expected production at Salobo, Wheaton is lowering production guidance," the company said.

The company's average cash costs in Q2 were $440/GEO, as compared to $444/GEO in the same quarter last year.

"This resulted in a cash operating margin of $1,338/GEO sold, a decrease of 6% as compared with the second quarter of 2021," Wheaton said.

Wheaton's share price fell 3% day on day to C$33.65 on 12 August.

BMO lowered its one-year target price for Wheaton from $54 to $53.

Wheaton declared its third quarterly cash dividend payment on 11 August of $0.15/share.

The company has a market capitalisation of C$19.42 billion.

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